AVOID TAX ON DEBT CANCELLATION

HOW TO AVOID INCOME TAXES ON YOUR DEBT CANCELLATION WHEN YOUR HOME OR INVESTMENT PROPERTY GOES INTO SHORT SALE/FORECLOSURE

Cancellation of debt from a short sale/foreclosure is considered taxable income. There are certain exemptions that apply that can help you avoid paying tax on the cancellation of debt. We recommend you consult with a competent CPA or tax advisor if you have a home or investment property that subject to short sale or foreclosure.

A seller in a short-sale – protection from liability.

OWNER-OCCUPIED RESIDENCE. (special exemption).

Seller is not liable for income from the discharge of their debt on a principal residence for the calendar years 2007-2012 – up to $2.0 million if married filing jointly. ($1.0 million if married filing separately). This debt discharge could come from a loan modification, foreclosure, short-sale etc……

GENERAL RULES FOR DEBT CANCELLATION (INCLUDING NONOWNER OCCUPIED REAL ESTATE)

Debt forgiven is considered taxable income (lender will send 1099-C)

When is it not taxable:

1. Debts discharged through bankruptcy

2. Insolvency – insolvent at the time of the cancellation of debt (Liabilities exceed assets = insolvency)

3. Non-recourse loans (the lender has no recourse to go after the owner, they can only take the property back – I doubt you will see much of this one)

Form 982 must be filed with your yearend tax return to indicate items 1, 2, or 3. If you are going to use insolvency, you must be able to show your liabilities exceeded your assets at the time of the foreclosure, loan modification etc……… I would recommend the client’s use a qualified CPA to prepare the insolvency personal financial statement to ensure it is done correctly and meets current definitions.

If you have questions concerning the taxability of debt cancellation. Please contact our office for a free consultation.

Energy Improvements Qualify for Expanded Tax Credits

People who weatherize their homes or purchase alternative energy equipment may qualify for either of two expanded home energy tax credits: the Residential Energy Property Credit and the Residential Energy Efficient Property Credit.

• Residential Energy Property Credit: The new law increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010. The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.
• Residential Energy Efficient Property Credit: This nonrefundable energy tax credit will help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines. The new law removes some of the previously imposed maximum amounts and allows for a credit equal to 30 percent of the cost of qualified property.

PAY YOUR LDS CONTRIBUTIONS ELECTRONICALLY

PAY YOUR LDS CONTRIBUTIONS VIA BILL PAYMENT SERVICES
The LDS Church is now accepting contributions that are made through your Bank’s Bill Payment services account. You can make all of your LDS donations this way except for contributions for “Ward Fast Offerings” and “Ward Missionary” contributions. Donations to these must still be made through your local Ward. The Church will provide monthly statements and an annual statement showing the contributions you have made to the different funds (Tithing, General Missionary, PEF etc…….). The Church will not provide statements to your Ward. Also, the Church will send the monthly statements via mail or email (we recommend email).

For many that are homebound, elderly, traveling, out of the country, in the military, serving missions, etc….This is an easy way to make your Church contributions. This is also very convenient way for those members that may be making large contributions that prefer they not go through their local ward.
The following are the instructions provided the Church for setting up contributions using your Bill Payment Services. Here is what we recommend:

1. Send an email to the Church stating that you will be paying your Church contributions via Bill Pay and that you would like to receive your monthly statements by email

LDS Donations 801-240-2554 donations@ldschurch.org

2. Follow the instructions below in setting up your Bill Payment Services
3. Make your contributions
4. Review your monthly statements received from the Church to verify the contributions are recorded accurately

Electronic Donations to Church Headquarters Through Bill Payment Service
Donations through bill payment services can be accepted for: Tithing, General Fast Offerings, General Missionary Fund (no Ward Missionary option is available through bill pay), Book of Mormon Fund, PEF (Perpetual Education Fund), and “Other” (the General Humanitarian Aid Fund). Bill payment donations cannot accommodate requests to send funds to a ward for fast offerings or missionary support. If you wish to give to your local fast offering or ward missionary fund you will need to give the donation directly to your ward.

In order for your donations to correctly post to your desired categories at church headquarters you must set up separate bill payments for each category to which you wish to donate. For example, if you would like to make a tithing donation and a donation for the General Missionary Fund, you must setup a bill-payment instruction named “LDS-Tithing” and a separate one named “LDS-Missionary (General)” on your banks’ bill payment system. The EXACT category names must be used and are case sensitive. Shown below are the exact names that must be used for the various donation categories:
LDS-Tithing
LDS-Fast Offering
LDS-Missionary (General)
LDS-Book of Mormon
LDS-PEF
LDS-Other

As part of setting up your bill pay instruction, your bank will ask you to input your account number with the party to whom you are making the payment. This account number is your church membership number. You can get your membership number from your ward clerk or it can be found on your temple recommend. Please input your membership number in this format: ###-####-#### all leading zeros and dashes are necessary.

During the bill pay set up, your bank will also ask for the address and telephone number of the church. Please use the following address for all of the donations categories listed above:
Please input this address EXACTLY as it shows here:

50 East North Temple Street
Room 1521
Salt Lake City, UT 84150

Phone: 801-240-2554

The bill payment service cannot send your donation to the Church electronically unless the category name and address for the church are identical to those listed above. It is also critical that your membership number is entered as the bill pay account number exactly as described above.

Monthly confirmations will be mailed to allow you to verify that your donation was received and allocated correctly. Tax valid receipts will also be mailed after each year end. Please contact our office if you have any additional questions.

Tax Credits Can Save You Money

These credits can increase your refund or reduce the tax you owe. Usually, credits can only lower your tax to zero. But some credits, such as the EITC and the child tax credit, can actually exceed your tax. Though some credits are available to people at all income levels, others have income restrictions. These include the EITC, saver's credit, education credits and child tax credit.

Tip: If you qualify, you can claim any credit, regardless of whether you itemize your deductions. Any credit can be claimed on Form 1040.

Tax credits help you pay part of the cost of raising a family, going to college, savings for retirement, or getting daycare so you can work or go to school.

For more tips visit: www.gurrcpa.com

Tax Alert!!!!!

- February 8, 2010

Tax season is now in full swing. Here are some items you, your family, and friends need to be aware of:

• DONATIONS TO HAITI RELIEF ARE TAX DEDUCTIBLE ON YOUR 2009 TAX RETURN

If you make a contribution before the end of February 2010, please see my blog at http://gurrcpa.blogspot.com/2010/02/donations-to-haiti-relief-are-tax.html for organizations you can donate to.

• TAXPAYERS TAKING THE FIRST TIME HOME BUYERS CREDIT (FTHBC) CANNOT FILE ELECTRONICALLY.

If you are filing for the FTHBC you will have to file a paper return and include the following additional documentation to your return: Form 5405, HUD-1 Settlement Statement, Certificate of Occupancy for newly built home. Refunds for FTHBC are taking over 16 weeks to be returned – so don’t spend the tax refund until you have it in hand!

• IF YOU HAVE A SON OR DAUGHTER IN COLLEGE WHO ARE FILING THEIR OWN TAX RETURN – PLEASE NOTE THE FOLLOWING:

If you are supporting them and they are under 24, you are required to claim them as a dependent – please be sure your son or daughter is not claiming themselves as a dependent on their own tax filing.

The new American Opportunity education credit allows you to claim a maximum credit of $2,500 for $4,000 for college expenses (tuition, books etc.). $1,000 of the credit is refundable (you get money back even if you owe no taxes). We are finding many college students who are filing their tax returns online that are not claiming this credit – if you file 1040ez you cannot claim this credit. We have amended several college students returns where they are getting $1,000 to $2,500 more back on their tax return!!

• NEW UTAH TAX CREDIT FOR STAY-AT HOME PARENTS:

Utah has a new nonrefundable credit of $100 for each child 12 months old or younger on the last day of 2009. Either the father or mother has to be staying at home taking care of the child.

• YOU CAN NOW PAY YOUR CONTRIBUTIONS TO THE LDS CHURCH ONLINE!

Yes that is right, you can now pay your LDS Contributions online through Bill Pay services and receive monthly statements from the Church. To learn more about this service, please see the following link on my website where you will find the details of how to set this up http://www.gurrcpa.com/CharitableDonations.php

• BUSINESS TAX RETURNS DUE MARCH 15, 2010

C Corp and S Corp business tax returns are due March 15, 2010. The IRS is assessing non filing and late filing penalties even if you owe no tax.

• PLEASE VISIT MY WEBSITE – DID YOU KNOW? www.gurrcpa.com

· We now have a Blogger, Twitter and Facebook account so you can receive up-to-date information which will save you $$$ and time. See www.gurrcpa.com

· You can now schedule your tax appointment online and use our interactive calendar to see what times and dates are available (updated hourly) see http://www.gurrcpa.com/appointments.php

· You can now pay your tax preparation fee or services online using a credit card or your PayPal account see http://www.gurrcpa.com/paymyfee.php

· You can download personal and/or business tax organizers from our website at http://www.gurrcpa.com/pdforganizer.php

· You can check your federal or state tax refund online to see if your return has been received and when you refund will be posted to your bank account. See http://www.gurrcpa.com/taxrefunds.php

Any many more items…

Emailing: ClassicBooksGiftsTh

Jon Schmidt will be playing a benefit concert at the Utah Valley University Grand Ballroom on Thursday, February 11, 2010 from 7 – 9 p.m.  This concert will have raise money for  a Nonprofit client of mine “The Afghanistan Project.”   The Afghanistan Project is a non profit organization made up of current and former military personnel who served in the Afghanistan war.  Their organization, via their relationship with the U.S. Military, has provided supplies needed by many orphanages that support orphaned Afghanistan children.  They have some amazing stories of how they have joined forces with many different religious, nonprofit, and the military to accomplish this mission of hope for these children. 

 

Please see their website at http://www.taoproject.org/fundraising.htm.  You can also order tickets at this website for the Jon Schmidt concert.  I am taking my wife as a valentine date to the concert.  Jon Schmidt is a wonderful entertainer and the price for the tickets  is only $7.99.  I hope to see you there.

 

Eric Gurr

DONATIONS TO HAITI RELIEF ARE TAX DEDUCTIBLE ON YOUR 2009 TAX RETURN

Donations to the Haiti Relief are tax deductible on your 2009 tax return if you make a contribution before the end of February 2010.

LDS Church
http://give.lds.org/emergencyresponse

Clinton Bush Haiti Fund
http://clintonbushhaitifund.org/

Red Cross
http://www.redcross.org/

Paying Off Debt the Smart Way

Being in debt isn't necessarily a terrible thing. Most people are in debt between mortgages and car loans and credit cards and student loans. Being debt-free should always be a goal, but you should focus on the management of it, not the presence of it. It'll likely be there foremost of your life, and if you handle it wisely, it won't feel so much like an albatross around your neck.

There're alternatives to shelling out your hard-earned money for exorbitant interest rates, and to always feeling like you're running behind and on the verge of bankruptcy. You can pay off debt the smart way, while at the same time saving money to pay it off faster.

Know Where You Are

First, assess the depth of your debt. Write it down, using pencil and paper or computer software like Microsoft Excel or Quicken. Include every financial situation where a company has given you something in advance of payment, including your mortgage, car payment(s), credit cards, tax liens, student loans, and payments on electronics or other household items through a store.

Record the day the debt began and will end (where possible), the interest rate you're paying, and what your payments typically are. Add it all up, painful as that might be. Try not to be discouraged; you're going to break this down into manageable chunks while finding extra money to help pay it down.

Identify High-Cost Debt

Yes, some debts are more expensive than others. Unless you're getting payday loans (which you shouldn't be), the worst offenders are probably your credit cards. Here's how to deal with them.

• Don't use them. Don't cut them up, but put them in a drawer and only access them in an emergency.

• Identify the card with the highest interest and pile on as much extra money as you can every month. Pay minimums on the others. When that one's paid off, work on the card with the next highest rate.

• Don't close existing cards or open any new ones as it won't help your credit rating.

• Pay on time, absolutely every time. One late payment these days can lower your FICO score.

• Go over your credit-card statements with a fine-tooth comb. Are you still being charged for that travel club that you've never used? Looks for line items you don't need.

• Call your credit card companies and ask them nicely if they would lower your interest rates. It works sometimes!

Save, save, save

Do whatever you're able to do to retire debt. If you take a second job, earmark that money strictly for higher payments on your financial obligations. Substitute free family activities for high-cost ones. Sell high-value items that you can live without.

Bag Unnecessary Items to Reduce Debt Load

Do you really need the 800-channel cable option or that dish on your roof? You'll be surprised at what you don't miss. How about magazine subscriptions? They're not terribly expensive, but every penny accounts. It's nice to have a library of books, but consider visiting the public library or half-price bookstores until your debt is under control.

Don't ever, ever miss a payment

You're not only retiring debt, but you're also building a stellar credit rating. If you ever decide to move or buy another car, you'll want to get the lowest rate possible. A blemish-free payment record will help with that. Besides, credit card companies can be quick to raise interest rates because of one late payment. A completely missed one is even more serious.

Do Not Increase Debt Load

If you don't have the cash for it, you probably don't need it. You'll feel better about what you do have if you know it's owned free and clear.

Shop Wisely, and Put the Savings on Your Debt

If your family in large enough to warrant it, invest $30 or $40 and join a store like Sam's or Costco. And use it. Shop there first, then at the grocery store. Change brands if you have to and swallow your pride: Use coupons religiously. Calculate the money you're saving and slap in on your debt.

Each of these steps, taken alone, probably doesn't seem like much, but learn to adopt as many of them as you can and you'll be able to watch your debt decrease every month.

Seven Ways to Get a Jump Start on Your Taxes

Earlier is better when it comes to working on your taxes. You are encouraged to get a head start on tax preparation, especially since early filers avoid the last minute rush and get their refunds sooner.

Here are seven easy ways to get a good jump on your taxes long before the April deadline is here:

1. Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s. Don't forget to save a copy for your files.

2. Get the right forms. They're available around the clock on the IRS Web site, www.IRS.gov.

3. Take your time. Don't forget to leave room for a coffee break when filling out your tax return as rushing can mean making a mistake.

4. Double-check your math and verify all Social Security numbers. These are among the most common errors found on tax returns. Taking care will reduce your chance of hearing from the IRS and speed up your refund.

5. E-filing is easy. E-filing catches math errors and provides confirmation your return has been received and gives you a faster refund.

6. Get the fastest refund. When you e-file file early, you receive your refund faster. When you choose direct deposit, you receive your refund sooner than waiting for a check. This year, electronic filing options will speed the payment of refunds to millions of taxpayers. Taxpayers who e-file and choose direct deposit for their refunds, for example, will get their refunds in as few as 10 days. That compares to approximately six weeks for people who file a paper return and get a traditional paper check.

7. Don't panic. If you have a problem or a question, call us. Also, remember the IRS is there to help. Try the IRS Web site at www.IRS.gov or call the IRS customer service number at 800-829-1040.

Please contact us if you have any questions. www.gurrcpa.com

How To Gauge Your Sales Force's Performance

It's vital, these days, to make sure you're getting the most out of on-premises sales staff. If goals are being met and revenue is where you want it to be, you may not need to use any measuring devices.

But if there is a problem, the following ratios, if applicable to your particular business, may help you pinpoint the problem, analyze it, and take action. The ratios can be applied to your entire business, to a division or department, or to one employee. Progress can be measured by comparing numbers from one month to the next.

Ratio 1: Total sales compensation/ gross sales = direct selling costs (%).

Ratio 2: Gross sales/total hours worked by salespeople = sales dollars per hour.

Ratio 3: Number of sales/number of full-time-equivalent sales people = number of sales per salesperson.

Ratio 4: Gross sales/ number of full-time-equivalent sales people = sales dollars per salesperson.

Ratio 5: Gross sales/ number of sales transactions = average sales dollars per transaction.

Tip: The numbers you get from these ratios might also be used to develop sales quotas or targets.

For more tips visit www.gurrcpa.com

Missing Your Form W-2?

You should receive a Form W-2, Wage and Tax Statement, from each of your employers for use in preparing your federal tax return. Employers must furnish this record of 2009 earnings and withheld taxes no later than February 1, 2010 (if mailed, allow a few days for delivery).

If you do not receive your Form W-2, contact your employer to find out if and when the W-2 was mailed. If it was mailed, it may have been returned to your employer because of an incorrect address. After contacting your employer, allow a reasonable amount of time for your employer to resend or to issue the W-2.

If you still do not receive your W-2 by February 15th, contact the IRS for assistance at 1-800-829-1040. When you call, have the following information handy:

• The employer's name and complete address, including zip code, the employer's identification number (if known), and telephone number,

• Your name and address, including zip code, Social Security number, and telephone number; and

• An estimate of the wages you earned, the federal income tax withheld, and the dates you began and ended employment.

If you misplaced your W-2, contact your employer. Your employer can replace the lost form with a "reissued statement." Be aware that your employer is allowed to charge you a fee for providing you with a new W-2.

You still must file your tax return on time even if you do not receive your Form W-2. If you cannot get a W-2 by the tax-filing deadline, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement, but it will delay any refund due while the information is verified.

If you receive a corrected W-2 after your return is filed and the information it contains does not match the income or withheld tax that you reported on your return, you must file an amended return on Form 1040X, Amended U.S. Individual Income Tax Return.

set up an appointment now http://www.gurrcpa.com/appointments.php